When your crypto assets are held in a custodial account on an exchange, your funds are held in wallets that you do not have access to.
You run the risk of a loss due to a custodial wallet hack or the potential for withdrawals to be halted without notice, which would prevent you from removing funds from the centralized exchange.
When you have crypto assets deposited on a centralized exchange, Custody Cover protects against:
- Custodial wallet hacks where you lose more than 10% of your funds
- The custodian halting withdrawals for more than 90 days
For more information, read the full terms and conditions of Nexus Mutual's Custody Cover.
Nexus Mutual's claims assessors use this cover wording as a reference when considering any claim.
Proof of loss
When you hold Custody Cover and suffer a loss of funds, you can file a claim, as outlined below, and claims assessors will review the claim submission to determine whether the claim is valid.
For Custody Cover claims, off-chain account verification and proof of loss is required. You will file a claim and provide screenshots of account statements, provide a link to your account statements hosted on Google Drive with the necessary personal information blacked out, and verify that your custodial account is indeed owned and controlled by you. This is done using a secure off-chain process.
Once you have proved you own and control the affected custodial account, claims assessors can review the off-chain account statements and any other supporting evidence to determine:
- If funds were deposited in the custodial account when the loss event occurred
- If the cover was active when the custodial loss event occurred
- If you suffered a loss of funds, and, if so, the amount of funds that were lost
Custodial losses can occur if a custodial wallet suffers a hack or if withdrawals are halted for more than 90 days.
If the loss is a result of withdrawals being halted, members can confirm that withdrawals have been halted and establish a date when claims filing can begin once the 90-day period has passed.
- If you hold Custody Cover at the time the custodial wallet hack occurs OR when withdrawals are first halted, you can submit a claim with supporting evidence, otherwise referred to as proof of loss.
- For halted withdrawals, claims can be filed once the 90-day period passes
- If you hold Custody Cover, you should regularly download your account statements, take screenshots of your account, access and store your read-only API keys, or download any other supporting evidence. Claims assessors can use this information to verify your loss amount.
- If a claim event occurs, there will be an off-chain process to verify that you own the custodial account ahead of filing a claim
- Claims assessors will review, discuss, and vote to approve claims where proof of loss shows that you have suffered a loss of funds.
- If the claim is approved, you will be able to redeem your claim payout
- If the claim is denied, you will be able to file another claim with more supporting evidence. There is no limit on how many claims you can file, but a deposit is required to file a claim.
For a review of the claims assessment process, see the Claims Assessment section.
Custody Cover claim payouts
Members have approved and paid more than $6m to cover holders who suffered a loss due to halted withdrawals on a centralized custodian.
To review Nexus Mutual's past claims record and individual claim stories, you can see the Claims History section.